Yahoo Finance American Water Works Co Inc's Dividend Analysis
Exploring the Sustainability and Growth of Dividends
American Water Works Co Inc (NYSE:AWK) recently announced a dividend of $0.77 per share, payable on 2024-06-03, with the ex-dividend date set for 2024-05-13. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into American Water Works Co Inc's dividend performance and assess its sustainability.
What Does American Water Works Co Inc Do?
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American Water Works is the largest investor-owned US water and wastewater utility, serving approximately 3.5 million customers in 16 states. It provides water and wastewater services to residential, commercial, and industrial customers and operates predominantly in regulated markets. The company's nonregulated business is water services for military bases, which operates under long-term contracts with regulated-like returns.
A Glimpse at American Water Works Co Inc's Dividend History
American Water Works Co Inc has maintained a consistent dividend payment record since 2008, distributing dividends on a quarterly basis. The company has increased its dividend each year since 2008, earning it the status of a dividend achiever. This accolade is reserved for companies that have consistently raised their dividends for at least 16 consecutive years.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down American Water Works Co Inc's Dividend Yield and Growth
As of today, American Water Works Co Inc has a 12-month trailing dividend yield of 2.09% and a 12-month forward dividend yield of 2.26%, indicating an expected increase in dividend payments over the next 12 months. Over the past three years, the annual dividend growth rate was 8.90%, increasing to 9.40% over a five-year period, and reaching 9.90% over the past decade.
Based on American Water Works Co Inc's dividend yield and five-year growth rate, the 5-year yield on cost of American Water Works Co Inc stock as of today is approximately 3.28%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. As of 2024-03-31, American Water Works Co Inc's dividend payout ratio is 0.58, suggesting that a significant part of its earnings is retained for future growth and stability. The company's profitability rank, at 8 out of 10, along with consistent positive net income over the past decade, underpins its strong profitability.
Growth Metrics: The Future Outlook
American Water Works Co Inc's growth rank of 8 out of 10 indicates a promising growth trajectory relative to its competitors. While its revenue per share and 3-year revenue growth rate of 1.90% per year slightly underperforms 79.03% of global competitors, its 3-year EPS growth rate of 7.80% per year and 5-year EBITDA growth rate of 7.60% show a solid foundation for sustaining dividends.
Next Steps
Considering American Water Works Co Inc's consistent dividend growth, prudent payout ratio, and robust profitability, the company appears well-positioned to continue rewarding investors with stable dividends. However, monitoring the growth metrics will be crucial for long-term sustainability. Investors seeking high-dividend yield stocks can explore further using the High Dividend Yield Screener available for GuruFocus Premium users.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
